Even playing field for government procurement

Updated
July 14, 2014 19:19:00

The head of Rossi Boots says Australian companies deserve a fairer go when they tender for Commonwealth contracts. The Defence Materiel Organisation knocked back a bid from the Adelaide based business to supply boots to the military awarding the contract to an importer. The Government says it will investigate.

But winning a Commonwealth contract to supply another 100,000 over five years for the Australian Defence Force would have been a coup for the 100-year-old boot maker.

Neville Hayward is the company's CEO.

NEVILLE HAYWARD: That sort of quantity would have had a significant impact on the business.

It certainly would have meant we would've immediately been looking to fill about 10 positions in the factory to help us meet the requirements of this contract.

CAROLINE WINTER: Rossi Boots tendered for two of three types of safety boots requested by the Defence Department in mid-2013.

But last week the Defence Materiel Organisation advised the company its bids were declined on a value for money basis.

Neville Hayward again.

NEVILLE HAYWARD: They said that we were complaint but it came down to a value for money appraisal.

Now I'm not sure what value for money means in fact, in the sense that when we asked the winning contract what price was that at, that's apparently commercial in confidence.

CAROLINE WINTER: In a statement, a spokesman for Defence Minister David Johnston said "the company was unsuccessful for one of the boots, because they were more expensive than the successful bidder, Amare Safety Pty Ltd in Victoria."

Those boots will be supplied by Blue Steel Boots, manufactured in Indonesia.

The company was also not successful for another type of boot because of value for money considerations.

Contract negotiations on that deal are ongoing, but it's the department's intention to satisfy both boot requirements under one contract.

But during Question Time in the Senate today, Senator Johnston responded to a question by South Australian Senator Nick Xenophon on the matter.

DAVID JOHNSTON: I am concerned, I will investigate this for you Senator.

I want to see the basis upon which we have discriminated, in terms of the ultimate winner of the tender.

If it's a matter of price, and if I can do anything, I will come back to you with what can be done.

CAROLINE WINTER: That will be some comfort to Neville Hayward, who says Australian companies are being penalised for having a higher cost on business.

NEVILLE HAYWARD: These products that are being imported - are they under the same conditions, are we actually comparing the same things?

We're not asking for a handout here.

We're just looking for a fair go.

CAROLINE WINTER: Senator Xenophon says that's a fair ask.

Not just for Rossi Boots, but all Australian companies bidding for tenders.

NICK XENOPHON: It's about $40 billion a year in procurement that the Federal Government dishes out.

And there's no requirement for Australian made, there's no requirement to take into account the flow-on multiplier effects of having something made here in Australia, where people are employed at award rates, where occupational health and safety is complied with, and above all, where there's a huge multiplier effect in the economy.

CAROLINE WINTER: Under current rules, the Defence Material Organisation can't consider the wider effect on the local economy of awarding a tender to an Australian business.

With Nick Xenophon's support, Victorian Senator John Madigan has established an inquiry investigating the procurement of Australian versus imported goods and services.

He says Australian manufactures don't mind losing contracts to others, as long as they comply with the same rules and regulations.

JOHN MADIGAN: The Government needs to understand that our job is to enhance Australians' lives, first and foremost - not to make it tougher.

And if we're going to purchase stuff, we must compare apples with apples.

The so-called level playing field is an enigma.

CAROLINE WINTER: The inquiry into government procurement is due to report later this week.